Olam shares surge sharply a day before firm announces Q1 results

An undated handout photograph shows an Olam International Ltd. employee loading a truck with boxes of cashew nuts for export, in Brazil, provided to the media on Friday, Dec. 5, 2008. Olam International shares surged to a seven-week high on Thur
An undated handout photograph shows an Olam International Ltd. employee loading a truck with boxes of cashew nuts for export, in Brazil, provided to the media on Friday, Dec. 5, 2008. Olam International shares surged to a seven-week high on Thursday, a day before it is expected to announce its first-quarter earnings on Friday morning. -- PHOTO: OLAM INTERNATIONAL LTD

SINGAPORE - Olam International shares surged to a seven-week high on Thursday, a day before it is expected to announce its first-quarter earnings on Friday morning.

The stock climbed to as high as $2.50 in intraday trading, about 10 per cent above its opening price at $2.25 on Thursday morning.

However, the gains pared to close at $2.41, up 7.1 per cent.

This occurred two days after the Singapore Exchange queried the company about unusual activity in the trading of its shares.

Olam had replied on Tuesday night that though it was "in discussions" on possible acquisitions or sales, "no definitive agreements have been signed at this time and there is no certainty that any of them will materialise".

An intraday gain of 10 per cent in one day would be Olam's biggest since March 14 this year, which was the day a unit of Temasek Holdings announced that it was planning a $2.5 billion takeover of the company.

Its shares leapt 11.8 per cent to close at $2.23 that day.

However, the counter had already been climbing for the weeks leading up to Temasek's big announcement. It had surged 34.8 per cent in total over six weeks from Feb 3.

That increase had prompted market commentators to ask in March why the Singapore Exchange had not queried Olam for unusual trading activity.

The bourse replied on March 16 that when deciding whether to issue a public query to a firm about unusual trading activity, it looks at several factors including the company's financials, the outlook of the industry it is in and analyst reports.

It added in its statement that Olam's share price surge from February to March had been within the price ranges set out in analysts' research reports.